It does save them money, which is why every large ISP does it.
The fact that makes it work is that not all routes through Google's network are created equal.
Routes that go to and from data centers go a longer distance, through more pieces of equipment, and include busy backbones that you do not want to get overloaded. Routes that stay in a local neighborhood go a short distance and put load on one router which should be able to take it, and totally skip the critical backbone.
From the point of view of the network operator, going to a data center is slow and expensive. Keeping traffic inside a local neighborhood is fast and cheap. Thus they want as much traffic as possible to go the fast and cheap route.
CDNs cache data on local mirrors, and routes traffic to them whenever possible because that is faster and cheaper than going all the way to a data center. Every large ISP does this, and it would be shocking if Google didn't follow suit.
But actually caching data on hardware that is sitting at customer's houses is an interesting twist.
The fact that makes it work is that not all routes through Google's network are created equal.
Routes that go to and from data centers go a longer distance, through more pieces of equipment, and include busy backbones that you do not want to get overloaded. Routes that stay in a local neighborhood go a short distance and put load on one router which should be able to take it, and totally skip the critical backbone.
From the point of view of the network operator, going to a data center is slow and expensive. Keeping traffic inside a local neighborhood is fast and cheap. Thus they want as much traffic as possible to go the fast and cheap route.
CDNs cache data on local mirrors, and routes traffic to them whenever possible because that is faster and cheaper than going all the way to a data center. Every large ISP does this, and it would be shocking if Google didn't follow suit.
But actually caching data on hardware that is sitting at customer's houses is an interesting twist.